Connecticut fiduciary adjustment counts tax exempt income twice

[Lissajous99]

I received a K-1 from a trust that includes non-CT tax exempt income. This is included in Box 14A of the K-1. So far so good.

The problem is that the K-1 mailing also includes a CT-1041 K-1 that shows a fiduciary adjustment which also includes the tax exempt income. This appears to cause this income to be counted twice in TurboTax. 

Has anyone else encountered this problem, and if so how do I deal with it?  

[Lissajous99]

I should clarify that the problem relates to my CT state return. The tax exempt income appears on both Sched. I line 31 (Interest on Sate and local obligations other than CT) and line 34 (beneficiary's share of CT fiduciary adjustment) 

[Lissajous99]

I think I have figured out a work-around for TurboTax counting trust tax exempt income twice for CT taxes.  

The problem is that if your K-1 shows tax exempt income (Code A in box 14) and the income is taxable in CT (e.g. from a national muni bond fund) you would think when going through the K-1 questions in TurboTax that you should select "Multiple states" for the source of the income. This causes the income to flow to CT-1040 line 31.

However it turns out that an adjusted version of this income is also included on the CT Fiducuary Adjustment line of the CT-1041 that is provided along with the federal K-1. When you enter this in the CT portion of TurboTax, the tax exempt income is counted twice in the CT tax computation. 

The work-around is when entering the K-1 numbers in the Federal section of TurboTax, you should say that the tax-exempt income is from CT and not from multiple states. That stops it from showing up on CT-1040 line 31.

Disclaimer: I am not a tax advisor. 

[PDubGuitar37]

I have a similar problem on CT schedule 1 but it's the amount from line 32 duplicated in line 37. The form totals lines 31 through 37 into line 38 so the amount is doubled.